In Markets
It hasn’t been a great week, with Bitcoin currently 22.6% down on last Tuesday to trade just above A$55K (US$42.8K). It’s corrected around 30% in a month for its worst performance since Black Thursday (still, there were seven larger corrections between 2015 and 2017.) It wasn’t all bad – while ETH corrected 18.2%, it’s still up 38.4% this month and the market cap topped half a trillion US for the first time this week. XRP was up 4.3%, Polkadot was up 4.7%, AAVE increased 28.7% and Synthetix was up 20.1% apparently on rumours something big is happening this week. Bitcoin Cash lost 22%, Litecoin was down 23.6%, Chainlink -22.4%, Stellar lost 4.8%, EOS lost 4.7%. Last week The Fear and Greed Index was around 68 (greed) but it took a dive to 20 (extreme fear) yesterday, the lowest point since April 2020. It’s since recovered to 27 (fear). Glassnode attributes the dip mainly to 1.1 million noobs panic selling.
In Headlines
Leading indicators
Bitcoin’s MVRV-Z score has dipped to 2.7, the lowest point so far in 2021. The score compares the current price to the price each Bitcoin was last sold at onchain and has been historically shown to predict market tops when the score hits 8 or higher. The indicator was above 7 in February. The current score suggests we are nowhere near the market top. Glassnode data indicates about 23% of on-chain wallets are currently at a loss. The Bitcoin Rainbow chart meanwhile suggests we have dropped back into ‘hodl’ which is smack dab in the middle of the chart.
EY is AOK with DeFi
EY has announced a US $100M investment (A$128M) into blockchain and crypto asset research engineering and services. It’s also offering a Testing Studio service to review DeFi smart contracts and has signed up Birra Peroni as the first client of its EY OpsChain Traceability supply chain tracking service. It runs on Ethereum.
That Musk fellow
It was hard to escape the influence of Elon Musk on the markets this week. First he announced Tesla would stop accepting BTC payments for cars due to the company’s concerns regarding the “rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal.” Tesla made half a billion from carbon credits in Q1, which may help explain this decision. Then he revealed he’s working with DOGE developers to improve that coin’s efficiency and yesterday tanked markets by agreeing with a tweet suggesting Tesla might sell off its holdings. He later clarified Tesla isn’t selling. While he has a big impact on sentiment, Tesla probably only has around 38K Bitcoin (according to Lark Davis), which is dwarfed by the 215K Bitcoin that institutions bought last month.
The other FUD
Tether has quietly disclosed how it invests its reserves. It holds just 3.87% in cash, 24.2% in fiduciary deposits and 65.39% in unknown – and potentially risky – commercial paper. Avanti founder Caitlin Long called it a “big negative surprise” and she believes much of this week’s dip was due to hedge funds taking a haircut on Tether exposure and selling off other crypto to de-risk their positions. “There’s now much bigger risk that #Tether may ‘break the buck'” she said, by which she means lose its USD peg, which would cause turmoil on crypto markets.
Aave becoming an institution
Aave was a ray of light in the markets this week, after founder Stani Kulechov confirmed institutions are testing out the protocol. The news wasn’t made with an official announcement: someone posted they’d received an anti-money laundering block on their account and Kulechov was forced to explain it was related to a private pool for institutions trying out the protocol “before aping into DeFi”.
Uniswap flips Bitcoin
Decentralised exchange Uniswap has flipped the entire Bitcoin network in terms of fee revenue generated. And no, it’s not based on the insane ETH gas costs users incur on the platform, it’s based on the amount of fees Liquidity Providers receive for swaps. It’s currently raking in about A$2.6M more per day than the Bitcoin network, and that’s without counting the new Uniswap v3 which hit US$1.3B volume in its first week.
Crypto is 2% of money supply
Researchers at Delphi Digital estimate that cryptocurrencies now account for 2% of the global money supply. They attribute much of the growth this year to stablecoins and DeFi protocols. Between Ethereum, Binance Smart Chain, Solana and various others, there is now US$130B (A$167B) locked in DeFi.
Am I blue?
Microsoft is quietly shutting down its enterprise focused Azure blockchain in September. No explanation has been given and Microsoft pointed users to the Quorum Blockchain Service by Consensus.
Based
Coinbase released its Q1 results this week, and revenue has tripled from the previous quarter to US$1.8B. It’s earnings of US$3.05 per share were pretty close to expectations and the net profit was $771M (A$992M). While monthly active users more than doubled to 6.1M the share price has fallen below the day one reference price of US$250, and the market cap is currently US$49B (A$63B).
Galaxy of profits
Galaxy Digital saw another record quarter, doubling its net income to US$860 million (A$1.1B). To put that in perspective a year ago it made US$26.9M (A$34.6M) in the first quarter of 2020. Galaxy acquired BitGo earlier this month for US$1.2B (A$1.54B).
Ether fees break records
Transaction fees on the Ethereum network have never been higher and look set to break the monthly record of $722 million (A$9.29M) at some point today. With two weeks left in May, this month could potentially see the network surpass its entire Q1 revenue of $1.7B (A$2.19B).
Until next week, happy trading!
